Customer retention practices are considered as derivers to accelerate firm performance in highly competitive business environment. However, scanty literature exists on agro-processing MSEs in developing economies. This study was carried out in Dar es Salaam, Arusha and Morogoro regions to examine the relationship between customer retention practices and performance of agroprocessing micro and small enterprises (MSEs). The study employed quantitative research approach and a cross-sectional research design. Proportionate stratified sampling was used to select a sample of 302 MSEs. A self-administered questionnaire was used to collect data from these firms. Structural Equation Modelling (SEM) was used to analyse the relationship between customer retention practices and firm performance. Firm performance was found to be positive and significantly influenced by assessment to customers, analysis of competitors, response to customer needs, inter-functional coordination practices and employees behavioural practices. Business-supplier relational practices posited positive relationship with the firm performance. The findings suggest that customer retention practices are influential determinants of the performance. This implies that owner-managers of agro-processing MSEs who wish to improve the performance of their firms should put emphasis on understanding the needs of their customers, analyse the actions and behaviours of competitors, appropriately coordinate internal functions of their firms and manage employees behaviours towards customers to ensure sufficient response to needs of the customers, and they should maintain positive relationship with the suppliers of raw materials. Likewise, practitioners and policy makers should appreciate the role of customer retention practices when designing policies, trainings and support services for MSEs.
Eliakira Nnko (Sat,) studied this question.
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